Real estate investment in Valencia becomes profitable again

The profitability of Valencia property investment in the residential rental market began to grow again in 2015 (5.2%).

Searching properly, working with good property investment support in Valencia and doing the right strategy can deliver rental yields of 8%, 9% and even above 10% in Valencia city at really affordable costs. But as an average, overseas investors could get just a 5.2%, as the below analysis breakdown shows.

In the past year, the average in Spain reached a rental yield of 5.5%, an increase compared to 2014, when the rate amounted to 5.3%. All this is due to the faster pace of normalization of rental prices in relation to sale prices, which was the greatly expected to return after the Spanish property bubble.

According to a study from idealist , real estate investment in Spain offered higher rates of profitability in general in 2015 compared to 2014, except in the case of offices sector.

According to the experts, this situation is due to the fact that the office rental market was the first to get restarted, particularly in the central zone of the city of Valencia, along with industrial warehouses, although these units are found around large centers of production, especially in the industrial parks of the Ford factory in Almussafes.

The same source assures that, in the worst of cases, housing profits doubled those of 10-year “State bonds”, which amount to 1.7%. According to this study, which compares sale and rental prices of different real estate products to calculate their gross return, “commercial premises” has remained the most profitable real estate investment in the past year.

Foreign buyers are also chasing opportunities in the cities

Investing in Commercial premises

Therefore, in 2015, purchasing “commercial premises” in Spain to be rent out as the main strategy, offered a gross return of 7.3%, compared to the 6.9% given in 2014. Garages, for their part, increased their profitability from 3.6% in 2014 to the 4.4% registered at the end of last year, while offices and shops offered a return of 6.6% compared to the 6.7% noted for the year before.

Cities of Profit

In the case of residential market, Lleida turned out to be the most profitable capital in 2015, with a profitability of 7.9%. Following this came Las Palmas de Gran Canaria (6.4%), Palma de Mallorca (6.2%), Alicante (6%) and Huelva (5.9%). In Barcelona, profitability was at 5.4%, higher than that of Madrid (5.3%) and Valencia (5.2%).

On the other hand, owners of rental housing in Orense (3.4%), San Sebastian (3.6%) and A Coruña (3.6%) showed the lowest returns in Spain over the course of the past year. Business premises, for their part, became the product with the highest returns in the majority of capitals, above all in Córdoba (8.8%) and Las Palmas de Gran Canaria (8.3%), followed by Girona (8%) and Zaragoza (8%).

This type of property showed a 7.7% return in Barcelona in the past year, and in Madrid, 7.6%. Castellón, for its part, offered the least attractive properties for investors in 2015 (with only 4.7% returns), followed by Huelva (5.4%), A Coruña and Salamanca (5.8% in both cases).

In the case of offices, Zaragoza offered the most fruitful returns of all the capitals, with a 6.9% gross return, followed by Vitoria (6.6%), Santa Cruz de Tenerife (6.6%), and Seville (6.4%). In Barcelona, profitability rose to 6%, while in Madrid it fell to 5.8%.

Offices market in Valencia

Valencia (4.8%), Santander (4.9%) A Coruña and Oviedo (5% in both cases) are on the opposite side. According to idealist.com, the office market is not as uniform as the market for other products, making it impossible to obtain statistical data for more than half of the Spanish capitals.

For their part, garages were the least profitable product for investors last year in many capitals. Specifically, Malaga (8.3%), Santa Cruz de Tenerife (5.8%), Pamplona (5.1%) and Castellón (4.7%) offered the highest returns for this product, while Salamanca (2.5%), Barcelona (2.7%) and Zamora (2.8%) were the least profitable. In Madrid returns were at 3%, staying almost in the middle of Spanish profits.

About Daniel Talavera

Spanish Property Finder working exclusively with buyers and investors in Spain